The diketone, diacetyl, is a major flavour metabolite produced by lactic acid bacteria (LAB). Of the LAB associated with wine, Oenococcus oeni is encouraged during the malolactic (ML) fermentation, a biodeacidification of wine during which the metabolism of diacetyl occurs. Diacetyl, which imparts a buttery aroma and flavour to many fermented foods and beverages, is a key flavour compound of most fermented dairy products. In wine, diacetyl has important stylistic implications. The biosynthesis of diacetyl is dependent upon citric acid metabolism and diacetyl is an intermediate metabolite which can be further reduced to acetoin and the alcohol, 2,3-butanediol. This review will focus on the sensory perception, metabolism, genetics and analysis of diacetyl during wine production. The extensive knowledge of diacetyl metabolism in dairy LAB is used to enhance the understanding of diacetyl metabolism of wine LAB. Factors which can effect the formation and concentration of diacetyl in wine are discussed. These include malolactic bacterial strain, wine chemical and physical parameters (pH, temperature, citric acid, sulfur dioxide, aeration) and the presence of yeast lees. Finally, the affects of other wine components, such as phenolics, are discussed.